Who do you think is confused and which direction do you think they are confused about? I have ripped and maintain all of our DVDs as ISOs. I currently use Daemon Tools to mount the ISO to a virtual drive so DVD software can play it back. That is an ISO, not an IFO, but to the playing software it's a real DVD inserted into a real DVD ROM drive.
I don't believe MC needs to know how to "play" an ISO. But it would make a whole lot of sense for it to recognize ISOs as a valid media type, and allow for the proper mounting and playback of whatever type of media it is. The only ones that make sense to me would be DVD-Video, CD-Audio, DVD-Audio, and whatever you call Video Discs. Then treat the ISO as such for all of the other metadata and cover art goodness MC already does very well.
It seems like some people have done this already using scripts with MC11 and MC12, but when someone asks for information on how they do it most people do not respond with the instructions, or they reference "wiki" without saying which one. Maybe the answer is already there, but it is not apparent.
Scott